REALTOR® Professionalism and the Code of Ethics


 Tracy Rucka  |    March 07, 2013
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The Code and personal transactions

Standard of Practice 1-1 provides that “REALTORS®, when acting as principals in a real estate transaction, remain obligated by the duties imposed by the Code of Ethics. (Amended 1/93)”

Personal transactions and advertising 

An agent is running an ad for rental on a property, but the name of the broker and company are not in the ad. Does this violate the Code of Ethics? 

Article 12 of the Code of Ethics states that REALTORS® shall be careful at all times to present a true picture in their advertising and representations to the public. REALTORS® shall also ensure that their professional status — for example, broker, appraiser or property manager — or status as REALTORS® is clearly identifiable in any such advertising. In addition, Standard of Practice 12-6 provides that “REALTORS®, when advertising unlisted real property for sale/lease in which they have an ownership interest, shall disclose their status as both owners/landlords and as REALTORS® or real estate licensees. (Amended 1/93)”

Personal transactions and disclosure of interest 

An agent, personally and not in an LLC, owns vacant land and plans to sell. What disclosure must be made about the agent’s licensee status and property ownership?

Anytime a licensee has an ownership interest in property, the licensee should refer to company policy about such proposed sales transactions. Companies have different policies about how to structure such transactions to comply with license law, comply with the Code, avoid liability and assure compliance with errors and omissions insurance coverage. 

Article 4 of the Code of Ethics provides, in relevant part that, “In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. (Amended 1/00)” Standard of Practice 4-1 indicates that these written disclosures should be made before signing any contract. These provisions mirror the disclosure of interest rules in Wis. Admin. Code § REEB 24.05, which require a licensee who is the buyer or seller in a transaction to disclose the real estate license and obtain the prior written consent of all parties to the transaction. The REEB rules were recently updated to require the consent in the offer to purchase.

Respect other REALTORS®' relationships with clients

Contacting another broker’s client 

The broker has a property under an Exclusive Right to Sell listing contract that does not expire until summer. Another REALTOR® contacted the seller with a letter discussing the benefits of listing with their company. The letter is addressed specifically to the sellers and does not include a disclaimer for the sellers to disregard the letter if the property is currently listed. Does this violate the Code of Ethics? What actions should the listing broker take? 

Article 16 provides, “REALTORS® shall not engage in any practice or take any action inconsistent with the agency or other exclusive relationship recognized by law that other REALTORS® have with clients. (Amended 1/98)” However, Standard of Practice 16-2 does not preclude REALTORS® from making general announcements to prospective clients describing their services and availability even though recipients may have entered into agency agreements or other exclusive relationships with another REALTOR®.

A general mailing or distribution addressed to all prospective clients in a given geographical area or in a given profession, business, club or organization, or other classification or group, is deemed “general” for purposes of this standard. If the mailing was part of a mass mailing and not targeted, there may be no violation of the Code of Ethics. The listing broker may wish to contact the agent and his or her broker regarding the fact that the seller received said letter and that the property is currently listed under an exclusive right to sell listing. While it is common practice to include a statement to any seller of a property to disregard the promotional material if their property is currently listed, it is not required under the law or by the Code. 

The agent was called to the sellers’ home to discuss listing the home. Upon arrival, the agent discovered a “For Sale” sign from another MLS company. The sellers stated that the current contract expires at the end of the month and the sellers do not want to extend the listing. May the agent enter into a listing to start next month? 

Yes, the new listing broker may enter into a listing that would begin next month. The second listing would be subject to the first broker’s rights with respect to the current listing based on listing protection or override rights it establishes with respect to properly qualified buyers. 

Pursuant to Article 16 of the Code of Ethics, a REALTOR® may not initiate contact with the client of another REALTOR®. However, if the seller contacts the REALTOR®, the REALTOR® may discuss terms upon which they may enter into a future listing contract. Standard of Practice 16-6 provides that, “When REALTORS® are contacted by the client of another REALTOR® regarding the creation of an exclusive relationship to provide the same type of service, and REALTORS® have not directly or indirectly initiated such discussions, they may discuss the terms upon which they might enter into a future agreement or, alternatively, may enter into an agreement which becomes effective upon expiration of any existing exclusive agreement. (Amended 1/98)” ]

The cooperating agent contacted the seller directly 

A REALTOR® from an out-of-town firm contacted the seller directly to show the property to a buyer who wanted to present an offer. The seller is not happy about this because she runs a business, and employees and clients have yet to know that the business is for sale. This out-of-town REALTOR® should contact the listing agent, correct? Was this unethical practice?

Wis. Admin. Code § REEB 24.13(5) provides that licensees may not negotiate the sale of a property with the seller directly if the party has an unexpired written contract in connection with the real estate that grants another broker an exclusive right to sell. All negotiations shall be conducted with the listing broker, and not the owner, except with the consent of the listing broker or where the absence of the listing broker or other similar circumstances reasonably compels direct negotiation with the owner. 

If the other broker is also a REALTOR® member, then Article 16 and Standard of Practice 16-13 of the Code of Ethics may also apply. Standard of Practice 16-13 indicates that, “All dealings concerning property exclusively listed, or with buyer/tenants who are subject to an exclusive agreement shall be carried on with the client’s representative or broker, and not with the client, except with the consent of the client’s representative or broker or except where such dealings are initiated by the client.”

Use of MLS to target another broker’s client

Another agent in town sent a seller a letter about offering buyer agency services. The listing broker believes that other agents are not allowed to solicit another broker’s client.
According to Standard of Practice 16-18, “REALTORS® shall not use information obtained from listing brokers through offers to cooperate made through multiple listing services or through other offers of cooperation to refer listing brokers’ clients to other brokers or to create buyer/tenant relationships with listing brokers’ clients, unless such use is authorized by listing brokers. (Amended 1/02)”

A broker visiting a neighborhood saw a property with two signs on the front lawn. How can one broker list for lease and one list for sale? Is this ethical?

The sale and lease of property are two separate interests in real estate. In some cases the broker with the listing for sale may not provide property management or leasing services, so the seller may need to engage two different brokers for the two interests. Standard of Practice 16-3 provides that, “Article 16 does not preclude REALTORS® from contacting the client of another broker for the purpose of offering to provide, or entering into a contract to provide, a different type of real estate service unrelated to the type of service currently being provided (e.g., property management as opposed to brokerage) or from offering the same type of service for property not subject to other brokers’ exclusive agreements. However, information received through a Multiple Listing Service or any other offer of cooperation may not be used to target clients of other REALTORS® to whom such offers to provide services may be made. (Amended 1/04)”

The Code and advertising “sold” properties

Can the broker advertise homes sold last year that include another company’s listings? For example, another broker listed the property and the first broker sold it. Can the first broker do this? Can two companies both advertise it as “sold”? 

Standard of Practice 12-7 previously limited the use of the word “sold” in advertising to the listing broker, but now Standard of Practice 12-7 provides that, “REALTORS® who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have ‘sold’ the property. Prior to closing, a cooperating broker may post a ‘sold’ sign only with the consent of the listing broker.” The references to cooperating brokers in this standard include selling brokers (subagents) and buyer’s brokers.

Accordingly, there may now be two different brokers claiming to have ‘sold’ the same property: the listing broker and the cooperating broker.

Tracy Rucka is Director of Professional Standards and Practices for the WRA.

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